CFTC Chairman Giancarlo Warns of Bitcoin Pitfalls

The Commodity Futures Trading Commission’s chairman is warning investors of the “considerable risks” associated with bitcoin and other cryptocurrencies.

In a statement today, J. Christopher Giancarlo said the dangers include the “nascent stage” of the technology, unregulated and unsupervised exchanges, the threat of hacking, trading volatility, and fraud and manipulation.

Giancarlo said that “ignoring virtual currency trading will not make it go away.” The commission will seek to promote responsible innovation in cryptocurrency “consistent with [the agency’s] statutory mission to enhance derivatives trading markets,” the chairman said.

In conjunction with Giancarlo’s statement, the CFTC announced a Jan. 31 meeting of its Market Risk Advisory Committee to discuss the process of self-certifiying new products by futures exchanges. CME Group used the self-certification process to introduce its bitcoin contract last month. Under that system, an exchange represents that a contract it wants to list complies with the Commodity Exchange Act and CFTC rules.